Cement import duty loss

01 June 2005

The discontinuation of cement imports into Jamaica since the duty was raised to over 40 per cent early last year has deprived the treasury of potential import duty of about J$100m, Business Observer calculations suggest. For 2003, the year before the duty was imposed Jamaica imported some J$633.4 million worth of cement according to government statistics. Back then, the imported cement attracted duty of 15 per cent or roughly J$95 million. But Carib Cement, the sole manufacturer of the product in Jamaica sought an increase in the duty on imported brands, arguing that the increased duty was essential if it was to be able to recover the US$100m it intended to spend on upgrading its Jamaican operation.

The countervailing duty was imposed in early 2004. For the first half of that year, imports fell to J$70.9 million or 11 per cent of the 2003 level, thus yielding only J$10 million in government import duty. With the tariff, the two principal importers of cement -mainland International and Arc Systems - exited the cement importing business. The tariff had the effect of pushing Carib Cement’s control from 75 per cent of the local market to 100 per cent.

Arc reportedly ceased importing the product in February last year, while Mainland’s last shipment arrived around April 2004. Both distributors are said to be now purchasing directly from Carib Cement. Carib Cement does not import any of the raw materials needed to produce cement in Jamaica, apart from the occasional import of clinker, an intermediate product, and coal fuel.

In October of 2003, the Antidumping and Subsidies Commission initiated an investigation in response to a complaint filed in September 2003 by Caribbean Cement. Based on the results of its probe, the commission recommended as provisional safeguard measure on ordinary Portland Gray cement being imported into Jamaica a rate of duty of 25.83 per cent. This rate was in addition to the 15 per cent charged on imported cement, and was intended to bring the importers’ costs in line with Carib Cement’s ex-factory price. In December 2004, the government gazetted the 40.83 per cent duty on all imported brands of cement to be applied for three years.